INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA – UAW

RON GETTELFINGER, President ELIZABETH BUNN, Secretary-Treasurer

VICE PRESIDENTS: GENERAL HOLIEFIELD • BOB KING • CAL RAPSON • JIMMY SETTLES

IN REPLY REFER TO
May 28, 2009
1757 N STREET, N.W.
WASHINGTON, D.C. 20036
TELEPHONE: (202) 828-8500
FAX (202) 293-3457

Dear Representative/Senator:

Recent news stories, editorials and op-eds regarding the GM restructuring plan
have contained a number of inaccurate assertions regarding the share of equity in
the new company that will go to various stakeholders. The UAW wishes to set the
record straight on this issue.

The real facts are contained in the SEC filing submitted by GM this morning. As
described there:

• the government will receive an initial allocation of 72.5% of the equity in the
new company;

• the bondholders will receive an initial allocation of 10% of the equity, with
warrants that can result in their receiving substantially more; and

• the Trust Fund established to provide medical benefits to retirees will

receive an initial allocation of 17.5%, with warrants representing the
potential for an additional 2.5%. However, the warrants issued to the
retiree Trust fund have terms far less advantageous than those issued to
the bondholders.

This allocation of equity represents an agreement between GM, the Treasury

Department, the UAW and the Committee representing bondholder interests.

It is important to recognize several points about this division of the equity in the
new company. The government is receiving an expanded stake in recognition of
the larger financial contribution that it will be making to facilitate the reorganization
of the company. At the same time, the equity shares being given to the
bondholders and the retiree health-care fund should have increased value
because the reorganized company will be relieved of most of the liabilities that
formerly burdened GM.

Some recent news reports and opinion columns, including an editorial by the
Washington Post on May 26th, have asserted that the division of equity is
somehow unfair to bondholders because the retiree health-care fund will be
receiving a 39% stake in GM, while the bondholders will only get 10%. As
indicated above, this is simply NOT accurate. The retiree health-care fund will not
receive, and indeed was never offered a 39% stake in GM. We would respectfully
suggest that the Washington Post should have determined what the facts were,
instead of issuing an inaccurate editorial based on rumors. Furthermore, since
the bondholder committee has agreed to the true division of equity outlined
above, it is simply not tenable for the Washington Post to complain that the equity
division somehow "ignores basic principles of fairness and economic realities."

The UAW also believes it is important to recognize the relative sacrifices being
made by retirees and bondholders:

• The retirees' health care claims have repeatedly been compromised,

through concessions that were agreed to by the UAW in 2005, 2007, and
now again in 2009. As a result of the most recent concessions, retirees will
incur substantial, immediate reductions in their health care benefits. When
the retiree health care fund assumes responsibility for providing these
benefits on January 1, 2010, it may be forced to make further significant
reductions in health care coverage, depending on the value of the stock
received by the fund.

• In contrast, many bondholders purchased their bonds at sharply

discounted rates. As a result, they are being asked to sacrifice a smaller
portion of their claims.

• Most bondholders are investors who can spread any losses across a broad
portfolio. In contrast, retirees do not have any similar way to spread the
losses they are sustaining. The retirees gave a lifetime of service to GM in
return for the promise that they would receive health care coverage during
their retirement years. They can't get their service back, or start over again
on a new career. Instead, they will be forced to live with reduced access to
health care and/or a lower standard of living.

The UAW recognizes that the ongoing restructuring of GM involves painful

sacrifices by many stakeholders. As Congress evaluates the restructuring plan, it
should consider the real facts on what retirees, bondholders and other
stakeholders will be receiving, not inaccurate assertions based on rumors.

Sincerely,

Alan Reuther
Legislative Director
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